Case Law Details
Notice under section 143(2) has to be served within stipulated time of six months on the assessee for framing assessment order under 143(3)
According to section 143(2) of the Income Tax Act, 1961(for short ‘the Act’), where a return has been furnished under section 139 of the Act, or in response to a notice under section 142(1) of the Act, the Assessing Officer (AO) or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the AO or to produce, or cause to be produced before the AO any evidence on which the assessee may rely in support of the return, provided that no notice under sub-section (2) of section 143 of the Act shall be served on the assessee after the expiry of 6 months from the end of the financial year in which the return is furnished.
Recently, in Cameron (Singapore) Pte Ltd vs. ADIT (International Taxation) [ITA No. 2/JP/2014, A.Y. 2010-11, decided on 27.07.2017], the appeal before ITAT Jaipur, one of the question was whether on the facts and circumstances of the case and in law, the AO erred in assuming the jurisdiction under section 143(3) of the Act based on the notice which has not been served on the appellant as per the time limit stipulated under the section 143(2) of the Act.
The learned Members of the ITAT, Jaipur took into account, the facts & circumstances of the case, rival submissions, case laws, legal provisions.
A portion of the CBDT Circular No. 549 dated 31.10.1989 states as follows:
“5.13 A proviso to sub-section (2) provides that a notice under the sub-section can be served on the assessee only during the financial year in which the return is furnished or within six months from the end of the month in which the return is furnished, whichever is later. This means that the Department must serve the said notice on the assessee within this period, if a case is picked up for scrutiny. It follows that if an assessee, after furnishing the return of income does not receive a notice under section 143(2) from the Department within the aforesaid period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return.”
The Delhi High Court observed/ held in CIT vs. Bhan Textiles P. Ltd. [(2006) 287 ITR 370 (Del)] as follows in Para 2 of its decision:-
“2. So far as the factual matrix of the case is concerned, the Revenue is in a worse position than that which obtained in CIT v. Lunar Diamonds Ltd. . Ms. Prem Lata Bansal, learned Counsel appearing on behalf of the appellant, seeks to point out that there was some doubt in CIT v. Lunar Diamonds Ltd. whether the notices had at all been sent or not. In the present case, however, it is the admitted case that the notice under Section 143(2) of the Income-tax Act though issued on November 27, 1997, and dispatched on November 28, 1997, was actually received by the assessed only on December 1, 1997. The assessed had filed the return on November 20, 1996, and, therefore, the time stipulated under the proviso to Section 143(2)(ii)for service of notice expired on November 30, 1997. The said proviso leaves no room for debate that the notice must be served on the assessed. In CIT v. Lunar Diamonds Ltd. the Division Bench had rejected the contention that the words “served” and “issued” are synonymous and are interchangeable. The Bench did not have the benefit of the decision of the hon’ble Supreme Court in R.K. Upadhyaya v. Shanabhai P. Patel , which in fact strengthens and fortifies the position that there is a clear distinction between “issuance of notice” and “service of notice”. Ms. Bansal’s reliance on Tea Consultancy and Plantation Services (India) P. Ltd. v. Union of India is of no avail since the word that had to be construed by the Division Bench in that case was “made” and not “issued” or “served”. We see no reason to adopt an approach different to the one adopted by us in CIT v. Vardhman Estate P. Ltd. [2006] 287 ITR 368 (Delhi) (I.T.A. No. 1248 of 2006) decided by us on September 25, 2006.”
Relying on the CBDT Circular No. 549 dated 31.10.1989 and respectfully following the judgment of Hon’ble Delhi High Court rendered in the case of CIT vs. Bhan Textiles (supra), the learned Members of the ITAT, Jaipur quashed the draft assessment order dated 28.03.2013 being barred by time. The assessment framed by the AO was held to be barred by the time as notice under section 143(2) of the Act was not served on the assessee within the time as prescribed by law.
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